The Tesla Model S is a sweet — but expensive — car. Which is why the above lease offer that greets you when you visit Tesla’s website seems like a great deal.
I’ve never leased a car, but $575 a month to drive a Tesla seems like a great deal. Almost too good to be true. In fact, it is too good to be true.
After test driving a Tesla, I started to dig into the numbers. As it turns out, your total cost is going to be at least $970 a month before tax.
Tesla does a couple things to get to the $575 number.
Unlikely Fuel Savings
First, it deducts $167 for monthly gas savings. Your payment is actually $742, but Tesla says you’ll make up the difference by paying for cheaper electricity.
This $167 number is awfully generous.
First, it assumes your old car got just 20 mpg and required premium gasoline. (I’ll admit that my old car gets less than 20 mgp and requires premium gas.)
Second, it assumes you’re paying $3.90 per gallon for this gas. That might have been accurate at some point, but right now it’s significantly less.
Third, it assumes you pay $.12 per KwH for electricity to charge your Tesla and use the company’s Superchargers for 10% of your charging.
Maybe I’m unfortunate, but in my hometown of Austin, $.12 per KwH isn’t close (at least during the summer). Some electricity providers are starting to offer off-peak charging, which could make this number reasonable if you charge your car overnight.
I personally don’t spend $167 on gas in an entire month, so I can’t save that much. But long distance commuters might find greater savings.
Bottom line: you’ll likely get gas savings, but the amount stated is an edge case at today’s gas prices.
Down Payment and Fees
The other bit of trickery Tesla is using is assuming a $5,000 down payment. This is like the car salesman asking “What do you want your payment to be?” because they can make it really low by playing with the variables.
According to Tesla’s website, you’ll also pay $3,195 in other charges due when you get the car.
Add it up and your 36-month lease costs a total of $34,907, which is $970 per month. This assumes you get the lowest priced model (sans even leather seats) and drive only 10,000 miles a year.
With leasing, there’s also a big sales tax factor. I live in Texas, and here you have to pay sales tax on the full value of the car up front, so I’d have to chip in another $4,375.
Suddenly $575 a month has become more than $1,000 in total cost, even if you live in a low sales tax state. You’ll save some money on gas, but most people should just calculate that as a small bonus.
The Model S is an amazing car. If you can afford the $70,000 starting price tag, I’d definitely recommend test driving one. Just don’t think you’ll be able to drive away with one for $575 a month.